Council postpones TBID vote

July 4, 2013

Mammoth’s new, tourism-based Business Improvement District went into a holding pattern this week when the Town Council pushed back a vote on the measure until at least July 17.

The increasingly controversial TBID assessment on businesses, which promises $4.7 million a year in revenue for tourism-based marketing and air service subsidies, is still very much alive.

But when the council on Tuesday, July 2, decided the TBID needed further work before it would vote, the proposal entered the nether world of suspended animation.

The council offered no official explanation as to why it decided to delay a vote. Instead, it offered the public another chance to comment at what became a third public hearing.

Going into the council meeting, both council member Jo Bacon and Mayor Rick Wood expressed skepticism regarding the overall fairness of the assessment, particularly on behalf of very small businesses operating on razor-thin profit margins.

Bacon, for her part, missed the meeting, to no one’s surprise. She notified the council weeks before that her schedule would force her to miss the meeting.

Wood, who assumed the mayorship on June 19, was still on the fence right up to Tuesday afternoon.

Moreover, the proposal before the council, written and pushed forward by John Urdi, Mammoth Lakes Tourism’s executive director, contained three changes.

First, based on public feedback and the concerns of Bacon and Wood, the assessment rate for businesses with $49,999 or less in annual revenue was reduced from a flat fee of $500 a year to $50 a year.

Second, the appeals process was also modified to designate Mammoth Lakes Tourism (MLT), rather than the town staff or the council, as responsible for handling any appeals regarding the assessment amount from the affected businesses.

Urdi said the appeals panel, yet to be named, would be selected from the sitting members of the MLT Board of Directors, which includes seven members representing lodging, retail/restaurant, the Chamber of Commerce, Mammoth Mountain Ski Area, and the Town Council, along with a director at-large.

The third tweak to the proposal was for businesses that can demonstrate they do not receive revenue from tourists, and which therefore do not benefit from the programs involved. Such businesses can earn an exemption from the assessment.

The town, under the aegis of Mammoth Lakes Tourism, would begin collecting money from tourism-related businesses as early as late summer, according to Urdi.

Locked in a five-year lifespan, the so-called TBID would generate $4.68 million a year, with 93 percent of the first-year total going toward sales, marketing and public relations ($2.33 million) and “Air Subsidy Marketing” ($2.02 million).

Mammoth Mountain Ski Area CEO Rusty Gregory weighed in with some forceful comments during the process, promising to include the assessment on lift tickets to the Mountain Bike Park as well as the ski slopes.

Jack Copeland, president of the Chamber of Commerce, has spoken forcefully in favor of the proposal.

Writing to Chamber members, he said,

“We support business growth. We need to increase our marketing commitment in order to sustain and grow our position in the skiing and mountain resort world.

“More visitation is in the best interest of Mammoth businesses, employees, and residents. It is not enough to have great snow, blue skies, and majestic mountains,” Copeland wrote. “We have to tell the world that we have those things.”

The council went its own way, though, delaying a vote on the basis of the changes to the proposal, along with persistent rumors of one or more legal challenges to the proposal.

Wood, an attorney, said rumors of a legal challenge were not at the base of his concerns, but they played a part.

“I want the town to look very carefully at this possible legal challenge in advance of it,” Wood said in an interview before the vote.

“I’m not fearful of someone who says ‘I’m going to sue you,’ because you can’t conduct your life or business that way. But what you can do is to take it as an opportunity to examine very carefully whether you think you’re right under the law.”

The vote ended a fairly extended process that began May 16. The town mailed a notice to all businesses that would be assessed. That mailing initiated a 45-day protest period.

The TBID plan then underwent two public hearings, each following a June 5 “public meeting.”

The TBID would include all restaurant, retail and lodging businesses within the town limits, plus Mammoth Mountain Ski Area.

Under the plan, which would extend for five years beginning Aug. 1, lodging would contribute one percent of gross room revenue to the TBID.

Most retail stores within the district would contribute 1.5 percent; the ski area would contribute 2 percent of lift ticket and ski school sales, and 1.5 percent of equipment rentals and retail revenues.

Businesses that generate less than $150,000 but more than $50,000 in annual revenue and which do not receive at least 50 percent of their annual revenue from visitors as determined by credit card receipts, would pay a flat fee of $500 a year. Businesses with less than $50,000 in annual revenue would pay a flat fee of $50 a year.

By far the biggest contributor would be Mammoth Mountain Ski Area, with an estimated annual contribution of $1.8 million. Retail businesses would contribute $1.35 million, lodging would chip in $800,000, and restaurants would contribute $750,000.

Of that total, $2.35 million would go toward sales, marketing and public relations; $2,012,000 would go toward air service subsidy marketing; $141,000 would go toward administration, $94,000 would go to collection costs and another $94,000 would go to a “contingency” fund.

Over the course of the lengthy discussions, there was no consensus as to whether the TBID was an assessment or a tax—a wolf in sheep’s clothing, as it were.

Wood, for example, consistently had referred to it as a “tax,” as outlined in remarks he made in an interview late last month.

“It’s a tax,” he said. “We call it an assessment; we call it self-imposed. But we’re getting it from the consumer.”

Technically, however, a TBID is not a tax per se. TBIDs are an evolution of the traditional Business Improvement District.

The first TBID was formed in West Hollywood in 1992. Since then, over 70 California destinations have followed suit. In recent years, other states, such as Washington, Montana, and Texas, have begun adopting the California model.

Even so, Urdi himself conceded Mammoth’s model “is an anomaly,” because the Mammoth TBID extends beyond the lodging industry and could include just about anything.

It is for that reason that Wood, for one, had the yips going into Wednesday’s meeting, and contributed to the delayed vote.

“It needs broader support, and that’s where I’m really going with this,” he said. “What I want to do is more than tinker with it; I want there to be some changes that will make it more equitable.”

Wood also said he wanted to make sure the measure was not passed “in isolation.”

“We’ve heard the argument already that a rising tide lifts all boats. We heard that during the last boom, the Intrawest years—the go-go years. But I don’t think it did.

“I just don’t think you can just assume you’ll raise a bunch of money and spend it willy-nilly, and produce a different result.

“Maybe the discussion should be, how does this line up with the rest of our town priorities?”